Sugarcane and Sugar in 2007: Satisfactory Volume, but Export Price Problems (Business Brief No.1897)

While considering the situation for the Thai sugarcane and sugar in the 2006/07 production year, it was found that volume has been quite satisfactory. Although Thailand has been faced with flooding in many areas, it is expected that the sugarcane volume has increased by 32.8 percent to 62 million tons, compared to the 2005/06 production year volume of 46.7 million tons. The sugar produced is expected to reach 6.5 million tons, rising by 34.3 percent. However, it is noteworthy that there are many important risks to production this year that may affect the sugarcane and sugar industries, such as the price of sugar in the world market dropping from an average of around USCents15.4/lb. in 2006, and likely leveling off at an average of USCents12.0-13.0/lb. in 2007. Meanwhile, the continuously stronger Baht is causing Thai sugar prices to rise higher than competitiveness will allow. Both these factors will directly affect the revenues of businesses in the Thai sugarcane and sugar industries because 60 percent of the sugar produced domestically is intended for export.